Catenaa, Monday, May 25, 2026- Minnesota has approved legislation allowing banks and credit unions to offer cryptocurrency custody services, expanding regulated digital asset access while tightening oversight of crypto-related financial activity across the state.
Governor Tim Walz signed HF 3709 into law Friday, permitting financial institutions to hold and manage virtual currencies on behalf of customers beginning Aug. 1.
The law requires banks and credit unions to establish written policies covering cybersecurity, risk management, internal controls and operational compliance before launching crypto custody services.
Institutions must also notify the Minnesota Commissioner of Commerce at least 60 days before starting operations and submit details outlining their digital asset risk frameworks.
The legislation further requires strict segregation of customer crypto holdings from institutional assets, a measure aimed at reducing risks tied to insolvency or operational failures.
State Representative Bernie Perryman, one of the bill’s main authors, said the measure would allow Minnesota-based financial institutions to evolve alongside customer demand while reducing reliance on offshore or lightly regulated crypto firms.
The Minnesota Credit Union Network said the law strengthens consumer protections against fraud, theft and hacking through regulatory oversight.
Minnesota joins states including New York, Wyoming and Virginia that already permit regulated crypto custody services through financial institutions.
The state simultaneously moved in the opposite direction on crypto ATMs. Earlier this month, Minnesota approved legislation banning crypto ATMs and kiosks statewide.
Under the separate law, no new crypto ATMs may be installed after Aug. 1, while existing machines must be removed by Dec. 31.
The growing crackdown on crypto kiosks has already affected the industry. Bitcoin ATM operator Bitcoin Depot announced plans Monday to file for Chapter 11 bankruptcy and wind down operations.
